Why The Comcast Video Subscriber Increase Doesn’t Mean Much

Moderator

Comcast announced earlier this month that they had experienced a “modest gain” in video customers in the 4th quarter of 2013. The news caused the stock to surge. But, does this news mean that Comcast has really turned a corner, and that we should expect more gains in video customers, or is there a dynamic at work that Comcast is failing to mention?

During the last year Comcast has been busy encrypting “limited basic” channels in various service areas. Many of these areas saw “limited basic” encrypted during the final quarter of 2013. What Comcast is failing to mention is that before the transition there were “internet only” customers who could get the “limited basic” cable channels by simply connecting the cable to the back of their digital ready TV. When the channels were encrypted, these customers had to either find a different source of programming or subscribe to video service to get the channels they had been getting “free.” The end result is that Comcast was able to “add” video customers.

Ultimately the smart money is that this “moderate gain” in video customers is simply a temporary anomaly in an otherwise down market. There were many other Comcast customers who used “limited basic” encryption as an opportunity to rediscover free over the air broadcast television, and ultimately I believe that increased over the air viewership will be the lasting legacy of Comcast’s video encryption, not any new golden age for the cable industry.